THE EFFECTS OF WORLD WAR II ON ECONOMIC AND HEALTH OUTCOMES ACROSS EUROPE Iris Kesternich, Bettina Siflinger, James P. Smith, and Joachim K. Winter* Abstract—We investigate long-run effects of World War II on socioeco- able. SHARE covers representative samples of the popula- nomic status and health of older individuals in Europe. We analyze data from SHARELIFE, a retrospective survey conducted as part of SHARE tion aged 50 and over in thirteen European countries, with in Europe in 2009. SHARELIFE provides detailed data on events in child- about 20,000 observations. We also collected external data hood during and after the war for over 20,000 individuals in thirteen on casualties, timing and location of combat action, yearly European countries. We construct several measures of war exposure: experience of dispossession, persecution, combat in local areas, and hun- GDP by country, population movements, and male-female ger periods. Exposure to war and, more important, to individual-level population ratios. To our individual-level analysis of the shocks caused by the war significantly predicts economic and health out- multidimensional effects of a major shock that affected life comes at older ages. circumstances, we add new dimensions to a rapidly increas- ing literature that aims to explain the causes of health and wealth gradients in labor and health economics (see Deaton, I. Introduction 2007; Smith, 2009a; Heckman, 2012). SHARE not only measures major contemporaneous eco- ORLD War II (WWII) was one of the major trans- nomic and health outcomes of adults over age 50 in these W formative events of the twentieth century, with 39 European countries but includes retrospective modules million deaths in Europe alone. Large amounts of physical meant to capture salient parts of early life experiences, capital were destroyed through six years of ground battles including those related to the war. There are no microeco- and bombing. Many individuals were forced to abandon or nomic panel data in either the United States or in Europe give up their property without compensation and move to that have prospectively tracked people for that long a time new lands. Periods of hunger became more common even period.1 The coexistence of current prospective data com- in relatively prosperous Western Europe. Families were bined with retrospective data on key events that preceded separated for long periods of time, and many children lost the survey baseline opens up important new research oppor- their fathers. Many, including young children, personally tunities not before possible, and not simply those associated witnessed the horrors of war as battles and bombing took with the war. Since the end of World War II, Western conti- place in the very areas where they lived. Horrendous crimes nental Europe has had a rich and sometime tumultuous eco- against humanity were committed. Due to the war, political nomic and political history, the effects of which on its resi- and economic systems in many countries were permanently dents are not well documented. altered. There is legitimate concern about the quality of recall In this paper, we investigate the long-run effects of data, particularly for time periods decades in the past. But World War II on late-life economic and health outcomes in that concern has been lessened by a realization that recall of Western continental Europe (health, education, labor mar- events during childhood is better than for other periods of ket outcomes, and marriage). We explore several channels life, particularly if events are as salient, they certainly are in through which this war might have influenced individual this application. Smith (2009b) investigated several quality lives and document which groups of the population were markers and showed that his childhood health instrument most affected. Our research relies on retrospective life data was successful in matching known secular trends in child- from the European Survey of Health, Aging, and Retire- hood illnesses decades in the past.2 Moreover, we provide ment in Europe (SHARE) that have recently become avail- evidence in this paper that these recalled events in the SHARE retrospective about the war match the historical Received for publication December 17, 2011. Revision accepted for record. publication August 30, 2012. * Kesternich and Siflinger: University of Munich; Smith: RAND; Win- One aim of the paper is to illustrate how such retrospec- ter: University of Munich. tive life data can further our understanding of effects of We thank Alexander Danzer, Angus Deaton, Benjamin Friedman, Edward Glaeser, Dirk Jenter, Olmo Silva, Till von Wacher, participants of early-life conditions as affected by large external shocks the conference on Fetal Origins, Early Childhood Exposure, and Famine at such as war. The literature measuring impacts of macro- Princeton University, September 2011, as well as seminar audiences at events mostly has used ‘‘natural experiments’’ such as wars Boston University, Harvard University, and the University of Cologne for helpful comments on earlier versions. Sarah Lehner and Johanna Sophie Quis provided excellent research assistance. Kesternich acknowledges financial support from the DFG through SFB/TR 15. Smith is supported by 1 PSID, the longest microeconomic panel, began in 1968 more than various grants from NIA. This paper uses data from SHARELIFE release twenty years after World War II. The longest-running European microe- 1, as of November 24, 2010, or SHARE release 2.5.0, as of May 24, 2011. conomic panel, GSEOP, began in 1984, almost forty years after the war. The SHARE data collection has been primarily funded by the European 2 There was also no evidence of backward attribution of new episodes Commission through the fifth framework and sixth framework program. of adult health problems into a revaluation of childhood health. Adult SHARELIFE was supported through the seventh framework program. respondents whose health deteriorated between PSID waves were no Additional funding from the U.S. National Institute on Aging, as well as more likely than before to say their childhood health was not good or to from various national sources, is gratefully acknowledged. cite additional childhood health problems (Smith, 2009b) The Review of Economics and Statistics, March 2014, 96(1): 103–118 Ó 2014 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00353 by guest on 29 September 2021 104 THE REVIEW OF ECONOMICS AND STATISTICS or famines to study effects of early-life conditions at the In addition to a standard set of demographic attributes aggregate level. Largely due to data reasons beyond their (age, marital status, education), SHARE data include health control, the studies of which we are aware could not use variables (self-reported health, health conditions, health individual-level measures of whether a particular person behaviors), psychological variables (such as depression and was affected by the war and through which channel. Retro- well-being), economic variables (current work activity, spective life data, such as those from SHARE, contain sources and composition of current income), and net wealth detailed information and provide the opportunity to study (including housing, cars, and all financial assets (stocks, that issue. bonds), and cash minus all debts). Analyzing different outcomes is a first step in understand- SHARE’s third wave of data collection, SHARELIFE, ing the channels and mechanisms by which wars affect peo- collected detailed retrospective life histories in thirteen ple’s lives. Another possibility is using different measures of countries (Poland and the Czech Republic were added in war exposure such as the closeness of combat. We construct wave 2) in 2008–2009. SHARELIFE was based on life his- such measures from external data sources. In addition, tory calendar (LHC) methods. The interview starts with the SHARE data contain retrospective questions on several pos- names and birth dates of the respondent’s children (and sible channels of war exposure: hunger, the absence of the other information about them, including any deaths), fol- father, dispossession, and persecution. lowed by a full partner and residential history. This infor- Given the scale of the war and number of ways it funda- mation is used to aid in dating all other events. mentally changed the world, the existing economic literature The information in the life history includes family com- using World War II as a natural experiment is surprisingly position and type of home (number of rooms, running thin. Moreover, the literature that does exist is relatively water, toilet, and so on), number of books, and occupation recent and more American in context than European. This of father. These measures were used to create an index of may reflect the fact that the popularity of the natural experi- childhood SES at age 10. A childhood health history is also ments framework in economics itself postdated the war by included based on the Smith module included in the PSID many decades. Still, it does suggest that excellent research and HRS that queries about individual specific childhood opportunities remain, especially given the wide diversity of diseases and an overall subjective evaluation of childhood European experiences in World War II. health status (Smith, 2009b). In addition, respondents are This paper is divided into six sections. The next highlights asked about childhood immunizations and hunger during the main attributes of SHARE data and the additional data childhood. Adult health histories and job and income his- we collected for this research. Section III sets the stage for tories were also collected. Moreover, SHARELIFE pro- our analysis by presenting evidence of possible changes on vides detailed data on within-country region of residence which long-term effects of World War II may operate. The and housing during the full life of the respondents (child- fourth section summarizes statistical models that capture hood and adulthood).